952 LIFO Adjustment
Additions/Deductions
Deductions from Income
Synopsis
For dealerships using the “Last In First Out” method of cost accounting, Account 952 is established to record the amount of adjustment allowed by law under the LIFO regulations.
Debits |
Credits |
|
|
Example 1
Record the LIFO adjustment of $90,000 for new vehicles at year-end of which $55,000 is for new cars and $35,000 is for new trucks.
Journal: General Journal
Entry: |
|
Debit |
Credit |
Account 952 |
LIFO Adjustment |
$90,000 |
|
Account 231L |
Inventory – New Cars – LIFO Reserve |
|
$55,000 |
Account 237L |
Inventory – New Trucks – LIFO Reserve |
|
$35,000 |
Note:
Professional tax and accounting advice should be obtained regarding the proper method of setting up and reporting LIFO reserves and adjustments.
Transactions, which are related, should be recorded in separate sub-accounts. Sub-accounts serve to keep records organized for future analysis and auditing. The sub-accounts in these examples are designated by a letter following the account number (suffix). Please refer to your DSP's instructions for establishing sub-accounts.